1
Exhibit 1.1
RUSSIAN WIRELESS TELEPHONE COMPANY, INC.
1,530,000 Shares of Common Stock
and
2,200,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
, 1997
X.X. Xxxxxxx & Co., Inc.
As Representative of the several Underwriters
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Russian Wireless Telephone Company, Inc., a Delaware corporation (the
"Company"), and the stockholder listed in Schedule A (the "Selling Stockholder")
of this Underwriting Agreement (the "Agreement") hereby confirm their agreement
with the Underwriters named in Schedule B of the Agreement (the "Underwriters"),
for whom you are acting as representative (the "Representative"), as follows:
1. Description of the Securities.
The Company proposes to issue and sell and the Selling Stockholder
proposes to sell to the Underwriters an aggregate of 1,530,000 shares of common
stock, $.01 par value per share (the "Common Stock") of the Company, of which
1,500,000 shares are being sold by the Company and 30,000 shares by the Selling
Stockholder; and the Company also proposes to sell 2,200,000 redeemable common
stock purchase warrants of the Company (the "Warrants" and collectively with the
Common Stock, the "Securities") in the amounts set forth on Schedule B hereto.
Each Warrant shall entitle the holder to purchase one share of Common Stock for
$7.25, subject to adjustment. The Company proposes to grant to the Underwriters
(or to the Representative, individually) an option to purchase up to 229,500
additional shares of Common Stock and up to an additional 330,000 Warrants (the
"Additional Securities"). The offering of Securities and Additional Securities
contemplated hereby may sometimes be referred to as the "Offering."
(a) The Warrants.
The Warrants are exercisable beginning two years from the effective date
of the Registration Statement, as defined in Paragraph 2(a) (the "Effective
Date"), and expire five years after the Effective Date, subject to prior
redemption by the Company.
2
The shares of Common Stock issuable upon the exercise of the Warrants are
hereinafter referred to as the "Warrant Shares."
The Warrants will be redeemable at a price of $.50 per Warrant, commencing
two years after the Effective Date upon at least 30 days prior written notice
provided that the closing bid price of the Common Stock (or closing sales price
if listed on an exchange or on a reporting system that provides last sales
prices) for 20 consecutive trading days ending on the third day immediately
prior to the date on which notice of redemption is given shall exceed $14.50 per
share (subject to adjustment), subject to the right of the holder to exercise
his purchase rights thereunder until redemption. Notwithstanding the foregoing,
the Warrants may be exercised and/or redeemed commencing one year after the
Effective Date with the prior written consent of the Representative.
(b) Representative's Warrants.
The Company will sell to the Representative, for $10, a warrant to
purchase one share of Common Stock and one Warrant for each ten shares of Common
Stock and ten Warrants sold in this Offering excluding the Additional Securities
(a maximum of 153,000 shares of Common Stock and 220,000 Warrants) at a price
equal to $8.40 per share of Common Stock and $.60 per Warrant (the
"Representative's Warrants" and collectively with the Securities underlying the
Representative's Warrants, the "Representative's Securities"). The Warrants
underlying the Representative's Warrants shall be exercisable at a price of
$7.25 per Warrant. The Representative's Securities shall be non-exercisable and
non-transferable (other than to (i) officers of the Underwriters, and (ii)
members of the selling group and their officers or partners) for a period of 12
months following the Effective Date. Thereafter, they are exercisable and
transferable for a period of four years. If the Warrants underlying the
Representative's Warrants are not exercised during their term, they shall, by
their terms, automatically expire. The Representative's Securities shall be
registered for sale to the public and shall be included in the Registration
Statement filed in connection with the Offering.
2. Representations and Warranties of the Company.
A. The Company represents and warrants to the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form SB-2 (File No.
333-24177), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Securities under the Securities Act of
1933 (the "Act"). The
2
3
Company will file further amendments to said registration statement in the form
to be delivered to you and will not, before the registration statement becomes
effective, file any other amendment thereto to which you shall have objected in
writing after having been furnished with a copy thereof. Except as the context
may otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, exhibits and all other documents filed as
a part thereof or incorporated therein), is hereinafter called the "Registration
Statement" and the prospectus, in the form filed with the Commission pursuant to
Rule 424(b) of the General Rules and Regulations of the Commission under the Act
(the "Regulations") or, if no such filing is made, the definitive prospectus
used in the Offering, is hereinafter called the "Prospectus." The Company has
delivered to you copies of each Preliminary Prospectus as filed with the
Commission and has consented to the use of such copies for purposes permitted by
the Act.
(b) The Commission has not issued any orders preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects with the requirements of the
Act and has not included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, subject to the provisions set forth below and except as such
untrue statement or omission has been cured in the a subsequent preliminary
prospectus or in the final prospectus.
(c) When the Registration Statement becomes effective under the Act
and at all times subsequent thereto including the Closing Date (hereinafter
defined) and the Option Closing Date (hereinafter defined) and for such longer
periods as in the opinion of counsel for the Underwriters, a Prospectus is
required to be delivered in connection with the sale of the Securities by the
Underwriters, the Registration Statement and Prospectus, and any amendment
thereof or supplement thereto, will contain all material statements which are
required to be stated therein in accordance with the Act and the Regulations,
and will in all material respects conform to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty does not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company by you, for use in connection with the preparation of the
3
4
Registration Statement or Prospectus, or in any amendment thereof or supplement
thereto. It is understood that the statements set forth under the heading
"Underwriting" in the Prospectus with respect to (i) the amounts of the selling
concession and reallowance; (ii) the identity of counsel to the Underwriters
under the heading "Legal Matters"; and (iii) the information concerning the NASD
affiliation of the Underwriters constitute for purposes of this Section the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement and Prospectus, as the case may be.
(d) The Company and each of its subsidiaries (each a "Subsidiary")
are, and at the Closing Date and the Option Closing Date will be, corporations
duly organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation. The Company and each of its Subsidiaries
are duly qualified or licensed and in good standing as foreign corporations in
each jurisdiction in which their ownership or leasing of any properties or the
character of their operations requires such qualification or licensing, except
those jurisdictions in which the failure to so qualify would not have a material
adverse effect. The Company and each of its Subsidiaries have all requisite
corporate powers and authority, and, except as set forth in the Registration
Statement, the Company and each of its Subsidiaries and their employees' have
all material and necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies to own or lease their properties and conduct their businesses as
described in the Prospectus, and the Company and each of its Subsidiaries are
doing business and have been doing business during the period described in the
Registration Statement in compliance with all such material authorizations,
approvals, orders, licenses, certificates and permits and all material federal,
state and local laws, rules and regulations concerning the businesses in which
the Company or its Subsidiaries are engaged. The disclosures in the Registration
Statement concerning the effects of federal, state and local regulation on the
Company's or its Subsidiaries' businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement and carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required in connection therewith
have been obtained or will have been obtained prior to the Closing Date.
(e) This Agreement has been duly and validly authorized and executed
by the Company. The Securities (including the Common Stock and the Warrants),
the Warrant Shares, the Representative's Warrants to be issued and sold by the
Company pursuant to this Agreement, the Securities issuable upon exercise of the
4
5
Representative's Warrants and payment therefor, and the Common Stock and Warrant
Shares underlying such Representative's Warrants, have been duly authorized
(and, in the case of the Common Stock and the Warrant Shares, have been duly
reserved for issuance) and, when issued and paid for in accordance with this
Agreement (and, in the case of the Warrant Shares, upon exercise of the Warrants
and payment to the Company of the exercise price therefor), the Common Stock and
Warrant Shares will be validly issued, fully paid and non-assessable; the Common
Stock, Warrants, Warrant Shares, Representative's Warrants, Additional
Securities and Representative's Warrant Shares are not and will not be subject
to the preemptive rights of any stockholder of the Company and conform and at
all times up to and including their issuance will conform in all material
respects to all statements with regard thereto contained in the Registration
Statement and Prospectus; and all corporate action required to be taken for the
authorization, issuance and sale of the Common Stock, Warrants, Warrant Shares
and Representative's Warrants has been taken, and this Agreement constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms, to issue and sell, upon exercise in accordance with the terms thereof,
the number and kind of securities called for thereby.
(f) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation, as amended, or Bylaws of the Company or any of
its Subsidiaries or of any evidence of indebtedness, lease, contract or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
properties is bound, or under any applicable law, rule, regulation, judgment,
order or decree of any government, professional advisory body, administrative
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its Subsidiaries or their properties, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries; and no consent, approval,
authorization or order of any court or governmental or other regulatory agency
or body is required for the consummation by the Company or any of its
Subsidiaries of the transactions on their part herein contemplated, except such
as may be required under the Act or under state securities or blue sky laws,
except where a breach, violation or failure to obtain such consent would not
have a material adverse effect upon the business or operation of the Company or
its Subsidiaries.
(g) Subsequent to the date hereof, and prior to the Closing Date and
the Option Closing Date, the Company will not
5
6
issue or acquire any equity securities except that the Company may make
short-term investments as contemplated in the "Use of Proceeds" section of the
Prospectus. Except as described in the Registration Statement, the Company does
not have, and at the Closing Date and at the Option Closing Date will not have,
outstanding any options to purchase or rights or warrants to subscribe for, or
any securities or obligations convertible into, or any contracts or commitments
to issue or sell shares of its Preferred Stock, Common Stock or any such
options, warrants, convertible securities or obligations.
(h) The financial statements and notes thereto included in the
Registration Statement and the Prospectus fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved.
(i) Except as set forth in the Registration Statement, the Company
and each Subsidiary are not, and at the Closing Date and at the Option Closing
Date will not be, in violation or breach of, or default in, the due performance
and observance of any term, covenant or condition of any indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company or any of its Subsidiaries are a party or by
which the Company or any of its Subsidiaries may be bound or to which any of the
property or assets of the Company or any of its Subsidiaries are subject, which
violations, breaches, default or defaults, singularly or in the aggregate, would
have a material adverse effect on the Company or any of its Subsidiaries. The
Company and each of its Subsidiaries have not and will not have taken any action
in material violation of the provisions of the Certificate of Incorporation, as
amended, or the Bylaws of the Company or its Subsidiaries or any statute or any
order, rule or regulation of any court or regulatory authority or governmental
body having jurisdiction over or application to the Company or its Subsidiaries,
their businesses or properties.
(j) The Company and each of its Subsidiaries have, and at the
Closing Date and at the Option Closing Date will have, good and marketable title
to all properties and assets described in the Prospectus as owned by them, free
and clear of all liens, charges, encumbrances, claims, security interests,
restrictions and defects of any material nature whatsoever, except such as are
described or referred to in the Prospectus and liens for taxes not yet due and
payable. All of the material leases and subleases under which the Company or any
of its Subsidiaries are the lessor or sublessor of properties or assets or under
which the Company or any of its
6
7
Subsidiaries hold properties or assets as lessee as described in the Prospectus
are, and will on the Closing Date and the Option Closing Date be, in full force
and effect, and except as described in the Prospectus, the Company and its
Subsidiaries are not and will not be in default in respect to any of the terms
or provisions of any of such leases or subleases (which would have a material
adverse effect on the business, business prospects or operations of the Company
or any of its Subsidiaries taken as a whole), and no claim has been asserted by
anyone adverse to rights of the Company or any of its Subsidiaries as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company or any of its
Subsidiaries to continue possession of the leased or subleased premises or
assets under any such lease or sublease except as described or referred to in
the Prospectus, and the Company and each of its Subsidiaries owns or leases all
such properties as are necessary to its operations as now conducted and, except
as otherwise stated in the Prospectus, as proposed to be conducted set forth in
the Prospectus (which would have a material adverse effect on the business,
business prospects or operations of the Company or any of its Subsidiaries taken
as a whole).
(k) The authorized, issued and outstanding capital stock of the
Company as of , 1997 is as set forth in the Prospectus under "Capitalization";
the shares of issued and outstanding capital stock of the Company set forth
thereunder have been duly authorized, validly issued and are fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of capital
stock of the Company have been granted or entered into by the Company; and the
Common Stock, the Warrants and all such options and warrants conform in all
material respects, to all statements relating thereto contained in the
Registration Statement and Prospectus.
(l) Except as described in the Prospectus, the Company does not own
or control any capital stock or securities of, or have any proprietary interest
in, or otherwise participate in any other corporation, partnership, joint
venture, firm, association or business organization; provided, however, that
this provision shall not be applicable to the investment, if any, of the net
proceeds from the sale of the Securities sold by the Company in certificates of
deposits, savings deposits, short-term obligations of the United States
Government, money market instruments or other short-term investments.
(m) Ernst & Young LLP, and Ernst & Young (CIS) Limited, who have
given their reports on certain financial statements filed and to be filed with
the Commission as a part of the Registration
7
8
Statement, which are incorporated in the Prospectus, are with respect to the
Company, independent public accountants as required by the Act and the Rules and
Regulations.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, the Company has not (i) issued
any securities or incurred any liability or obligation, direct or contingent,
for borrowed money; or (ii) entered into any transaction other than in the
ordinary course of business; or (iii) declared or paid any dividend or made any
other distribution on or in respect to its capital stock.
(o) There is no litigation or governmental proceeding pending or to
the knowledge of the Company or any Subsidiary threatened against, or involving
the properties or business of the Company or any Subsidiary which might
materially adversely affect the value, assets or the operation of the properties
or the business of the Company or any Subsidiary, except as referred to in the
Prospectus. Further, except as referred to in the Prospectus, there are no
pending actions, suits or proceedings related to environmental matters or
related to discrimination on the basis of age, sex, religion or race, nor is the
Company or any Subsidiary charged with or, to its knowledge, under investigation
with respect to any violation of any statutes or regulations of any regulatory
authority having jurisdiction over its business or operations, and no labor
disturbances by the employees of the Company or any Subsidiary exist or, to the
knowledge of the Company or any Subsidiary, have been threatened.
(p) The Company has, and at the Closing Date and at the Option
Closing Date will have, filed all necessary federal, state and foreign income
and franchise tax returns or has requested extensions thereof (except in any
case where the failure to so file would not have a material adverse effect on
the Company), and has paid all taxes which it believes in good faith were
required to be paid by it except for any such tax that currently is being
contested in good faith or as described in the Prospectus.
(q) The Company has not at any time (i) made any contribution to any
candidate for political office, or failed to disclose fully any such
contribution, in violation of law, or (ii) made any payment to any state,
federal, foreign governmental or professional regulatory agency, officer or
official or other person charged with similar public, quasi-public or
professional regulatory duties, other than payments or contributions required or
allowed by applicable law.
8
9
(r) Except as set forth in the Registration Statement, to the
knowledge of the Company, neither the Company nor any of officer, director,
employee or agent of the Company has made any payment or transfer of any funds
or assets of the Company or conferred any personal benefit by use of the
Company's assets or received any funds, assets or personal benefit in violation
of any law, rule or regulation, which is required to be stated in the
Registration Statement or necessary to make the statements therein not
misleading.
(s) On the Closing Date and on the Option Closing Date, all transfer
or other taxes, if any (other than income tax) which are required to be paid,
and are due and payable, in connection with the sale and transfer of the
Securities by the Company to the Underwriters will have been fully paid or
provided for by the Company as the case may be, and all laws imposing such taxes
will have been fully complied with in all material respects.
(t) There are no contracts or other documents of the Company which
are of a character required to be described in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement which have not
been so described or filed.
(u) The Company will apply the net proceeds from the sale of the
Securities sold by it for the purposes and in the manner set forth in the
Registration Statement and Prospectus under the heading "Use of Proceeds."
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or specified authorizations; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (3) access to assets is permitted only in
accordance with management's general or specific authorizations; and (4) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Except as set forth in the Prospectus, no holder of any
securities of the Company has the right to require registration of any
securities because of the filing or effectiveness of the Registration Statement.
(x) The Company has not taken and at the Closing Date will not have
taken, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or
9
10
manipulation of the price of the Common Stock or the Warrants to facilitate the
sale or resale of such securities.
(y) To the Company's knowledge, there are no claims for services in
the nature of a finder's origination fee with respect to the sale of the
Securities hereunder, except as set forth in the Prospectus.
(z) Other than the right of first refusal granted by the Company to
the Representative (as set forth in Section 3(aa) hereof), no right of first
refusal exists with respect to any sale of securities by the Company.
(aa) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to Underwriters was, when made, or as of the
Closing Date or as of the Option Closing Date will be materially inaccurate,
untrue or incorrect.
B. The Selling Stockholder represents and warrants to the Underwriters
that:
(a) It (1) has the full right, power and authority to execute and
deliver this Agreement, the Power of Attorney, and the Custody Agreement,
hereinafter referred to, (2) is, and on the Closing Date will be, the owner of
the Selling Stockholder's Common Stock ("Stock") to be sold pursuant to the
terms hereof, free and clear of all liens, charges, encumbrances and
restrictions, (3) has paid the full purchase price required to be paid for such
Stock, (4) on the Closing Date will have paid or provided for all stock transfer
or other taxes (other than income taxes) required to be paid by such Selling
Stockholder in connection with the sale and transfer of such Selling
Stockholder's Stock and all laws imposing such taxes will have been fully
complied with, and (5) has, and on the Closing Date will have, the full legal
right, power and authority to sell, transfer and deliver such Selling
Stockholder's Stock hereunder and xxxxx good and marketable title to such
Selling Stockholder's Stock, free and clear of all liens, charges, encumbrances,
equities, claims and restrictions, whatsoever.
(b) This Agreement, the Power of Attorney and the Custody Agreement
have been duly authorized, executed and delivered by the Selling Stockholder.
This Agreement, the Power of Attorney and the Custody Agreement constitute the
valid and binding agreements of the Selling Stockholder enforceable in
accordance with their terms.
(c) Neither the execution and delivery of this Agreement, the Power
of Attorney, nor the Custody Agreement nor the consummation of the transactions
herein or therein contemplated nor
10
11
the compliance with the terms hereof or thereof by the Selling Stockholder will
conflict with, or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, purchase
agreement or other agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder is bound and no consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation by the Selling Stockholder of the transactions on the
Selling Stockholder's part herein contemplated, except such as may be required
under the Act or under state securities or blue sky laws.
(d) The Selling Stockholder has not, and at the Closing Date will
not have, taken, and agrees that it will not take, directly or indirectly, any
action to cause or result in, or which has constituted, or might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Stock. Other than as
permitted by the Act and the rules and regulations thereunder, the Selling
Stockholder has not distributed and will not distribute any Preliminary
Prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Stock.
(e) Certificates in negotiable form representing the Selling
Stockholder's Stock to be sold by it have been placed in custody under the
Custody Agreement, in the form heretofore furnished to the Selling Stockholder,
duly executed and delivered by the Selling Stockholder to Hall Xxxxxxx Xxxx
Xxxxxxxx & Xxxx, LLP (the "Custodian"), and the Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore furnished to
you, appointing Xxxxxx X. Xxxxxx as the Selling Stockholder's attorney-in-fact
(the "Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of the Selling Stockholder, to authorize the delivery of the Selling
Stockholder's Stock to be sold by the Selling Stockholder hereunder and
otherwise to act on behalf of the Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
(f) The Selling Stockholder's Stock represented by the certificates
held in custody for the Selling Stockholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder, and the arrangements
made by the Selling Stockholder for such custody, as well as the appointment by
the Selling Stockholder of the Attorney-in-Fact, are, to that extent,
irrevocable. The Selling Stockholder specifically agrees that its obligations
hereunder shall not be terminated by operation of law, whether by the death or
incapacity of such Selling Stockholder or by the occurrence of any other event.
11
12
3. Covenants of the Company.
The Company covenants and agrees that:
(a) It will deliver to the Representative, without charge, two
conformed copies of each Registration Statement and of each amendment or
supplement thereto, including all financial statements and exhibits.
(b) The Company has delivered to each of the Underwriters, and each
of the Selected Dealers (as hereinafter defined) without charge, as many copies
as have been requested of each Preliminary Prospectus heretofore filed with the
Commission in accordance with and pursuant to the Commission's Rule 430 under
the Act and will deliver to the Underwriters and to others whose names and
addresses are furnished by the Underwriters or a Selected Dealer, without
charge, on the Effective Date of the Registration Statement, and thereafter from
time to time during such reasonable period as you may request if, in the opinion
of counsel for the Underwriters, the Prospectus is required by law to be
delivered in connection with sales by the Underwriters or a dealer, as many
copies of the Prospectus (and, in the event of any amendment of or supplement to
the Prospectus, of such amended or supplemented Prospectus) as the Underwriters
may request for the purposes contemplated by the Act. The Company will take all
necessary actions to furnish to whomever directed by the Underwriters, when and
as requested by the Underwriters, all necessary documents, exhibits,
information, applications, instruments and papers as may be reasonably required
or, in the opinion of counsel to the Underwriters desirable, in order to permit
or facilitate the sale of the Securities.
(c) The Company has authorized the Underwriters to use, and make
available for use by prospective dealers, the Preliminary Prospectus, and
authorizes the Underwriters, all dealers selected by you in connection with the
distribution of the Securities (the "Selected Dealers") to be purchased by the
Underwriters and all dealers to whom any of such Securities may be sold by the
Underwriters or by any Selected Dealer, to use the Prospectus, as from time to
time amended or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act, the applicable Regulations
and applicable state law, until completion of the distribution of the Securities
and for such longer period as you may request if the Prospectus is required
under the Act, the applicable Regulations or applicable state law to be
delivered in connection with sales of the Securities by the Underwriters or the
Selected Dealers.
(d) The Company will use its best efforts to cause the Registration
Statement to become effective and will notify the
12
13
Representative immediately, and confirm the notice in writing: (i) when the
Registration Statement or any post-effective amendment thereto becomes
effective; (ii) of the issuance by the Commission of any stop order or of the
initiation, or to the best of the Company's knowledge, the threatening, of any
proceedings for that purpose; (iii) the suspension of the qualification of the
Securities and the Representative's Warrants, or underlying securities, for
offering or sale in any jurisdiction or of the initiating, or to the best of the
Company's knowledge the threatening, of any proceeding for that purpose; and
(iv) of the receipt of any comments from the Commission. If the Commission shall
enter a stop order at any time, the Company will make every reasonable effort to
obtain the lifting of such order at the earliest possible moment.
(e) During the time when a prospectus is required to be delivered
under the Act, the Company will comply with all requirements imposed upon it by
the Act and the Securities Exchange Act of 1934 (the "Exchange Act"), as now and
hereafter amended and by the Regulations, as from time to time in force, as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus. If at any time when a
prospectus relating to the Securities is required to be delivered under the Act,
any event shall have occurred as a result of which, in the opinion of counsel
for the Company or counsel for the Underwriters, the Prospectus as then amended
or supplemented includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify you promptly and prepare and
file with the Commission an appropriate amendment or supplement in accordance
with Section 10 of the Act and will furnish to you copies thereof.
(f) The Company will endeavor in good faith, in cooperation with
you, at or prior to the time the Registration Statement becomes effective, to
qualify the Securities for offering and sale under the securities laws or blue
sky laws of such jurisdictions as you may reasonably designate. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction.
(g) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than the first day of the
fifteenth full calendar month following the Effective Date of the Registration
Statement, an earnings
13
14
statement of the Company, which will be in reasonable detail but which need not
be audited, covering a period of at least twelve months beginning after the
Effective Date of the Registration Statement, which earnings statements shall
satisfy the requirements of Section 11(a) of the Act and the Regulations as then
in effect. The Company may discharge this obligation in accordance with Rule 158
of the Regulations.
(h) During the period of five years commencing on the Effective Date
of the Registration Statement, the Company will furnish to its stockholders an
annual report (including financial statements audited by its independent public
accountants), in reasonable detail, and, at its expense, furnish each of the
Underwriters (i) within 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its consolidated
subsidiaries and a separate balance sheet of each subsidiary of the Company the
accounts of which are not included in such consolidated balance sheet as of the
end of such fiscal year, and consolidated statements of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries and separate statements of operations, stockholders' equity and
cash flows of each of the subsidiaries of the Company the accounts of which are
not included in such consolidated statements, for the fiscal year then ended all
in reasonable detail and all certified by independent accountants (within the
meaning of the Act and the Regulations), (ii) within 45 days after the end of
each of the first three fiscal quarters of each fiscal year, similar balance
sheets as of the end of such fiscal quarter and similar statements of
operations, stockholders' equity and cash flows for the fiscal quarter then
ended, all in reasonable detail, and subject to year end adjustment, all
certified by the Company's principal financial officer or the Company's
principal accounting officer as having been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, (iii) as
soon as available, each report furnished to or filed with the Commission or any
securities exchange and each report and financial statement furnished to the
Company's shareholders generally and (iv) as soon as available, such other
material as the Representative may from time to time reasonably request
regarding the financial condition and operations of the Company.
(i) For a period of eighteen months from the Closing Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit), the Company's financial statements
for each of the first three quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-Q quarterly report and the
mailing of quarterly financial information to stockholders.
14
15
(j) Prior to the Closing Date or the Option Closing Date, the
Company will not issue, directly or indirectly, without your prior written
consent and that of counsel for the Representative, any press release or other
public announcement or hold any press conference with respect to the Company or
its activities with respect to this Offering.
(k) The Company will deliver to you prior to filing, any amendment
or supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date of the Registration Statement and will not file any
such amendment or supplement to which you shall reasonably object after being
furnished such copy.
(l) During the period of 120 days commencing on the date hereof, the
Company will not at any time take, directly or indirectly, any action designed
to, or which will constitute or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Securities to
facilitate the sale or resale of any of the Securities.
(m) The Company will apply the net proceeds from the Offering
received by it in the manner set forth under "Use of Proceeds" in the
Prospectus.
(n) Counsel for the Company, the Company's accountants, and the
officers and directors of the Company will, respectively, furnish the opinions,
the letters and the certificates referred to in subsections of Paragraph 9
hereof, and, in the event that the Company shall file any amendment to the
Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so long
as securities being registered by such amendment or supplement are being
underwritten by the Underwriters, furnish to you such opinions, letters and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters and the certificates referred to in said Paragraph 9, as
you may reasonably request, or, if any such opinion or letter or certificate
cannot be furnished by reason of the fact that such counsel or such accountants
or any such officer or director believes that the same would be inaccurate, such
counsel or such accountants or such officer or director will furnish an accurate
opinion or letter or certificate with respect to the same subject matter.
(o) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement in all material respects.
15
16
(p) The Company will reserve and keep available for issuance that
maximum number of its authorized but unissued shares of Common Stock which are
issuable upon exercise of the Warrants and issuable upon exercise of the
Representative's Warrants (including the underlying securities) outstanding from
time to time.
(q) Following the Effective Date and from time to time thereafter,
so long as the Warrants are outstanding, the Company will timely prepare and
file at its sole cost and expense one or more post-effective amendments to the
Registration Statement or a new registration statement as required by law as
will permit Warrant holders to be furnished with a current prospectus in the
event Warrants are exercised, and to use its best efforts and due diligence to
have same be declared effective. The Company will deliver a draft of each such
post-effective amendment or new registration statement to the Underwriter at
least ten days prior to the filing of such post-effective amendment or
registration statement.
(r) Following the Effective Date and from time to time thereafter so
long as any of the Warrants remain outstanding, the Company will timely deliver
and supply to its warrant agent sufficient copies of the Company's current
Prospectus, as will enable such Warrant Agent to deliver a copy of such
Prospectus to any Warrant or other holder where such Prospectus delivery is by
law required to be made.
(s) So long as any of the Warrants remain outstanding, the Company
shall continue to employ the services of a firm of independent certified public
accountants reasonably acceptable to the Representative in connection with the
preparation of the financial statements to be included in any registration
statement to be filed by the Company hereunder, or any amendment or supplement
thereto (it being understood that Ernst & Young, LLP is acceptable to the
Representative). During the same period, the Company shall employ the services
of a law firm(s) acceptable to the Representative in connection with all legal
work of the Company, including the preparation of a registration statement to be
filed by the Company hereunder, or any amendment or supplement thereto (it being
understood that Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP is acceptable to the
Representative).
(t) So long as any of the Warrants remain outstanding, the Company
shall continue to appoint a Warrant Agent for the Warrants, who shall be
reasonably acceptable to the Representative.
(u) The Company agrees that it will, upon the Closing Date, for a
period of no less than five (5) years, engage a designee of the Representative
as an advisor (the "Advisor") to its
16
17
Board of Directors where such Advisor shall attend meetings of the Board,
receive all notices and other correspondence and communications sent by the
Company to members of its Board of Directors and shall be entitled to receive
compensation therefor equal to the entitlement of all non-employee directors.
Such Advisor shall also be entitled to receive reimbursement for all reasonable
costs incurred in attending such meetings including, but not limited to, food,
lodging, and transportation. The Company further agrees that during said five
(5) year period, it shall schedule no less than four (4) formal and "in person"
meetings of its Board of Directors in each such year and fifteen (15) days
advance notice of such meetings shall be given to the Advisor. Further, during
such five (5) year period, the Company shall give notice to the Representative
with respect to any proposed acquisitions, mergers, reorganizations or other
similar transactions. In lieu of the Representative's right to designate an
Advisor, the Representative shall have the right during such five-year period,
in its sole discretion, to designate one person for election as a Director of
the Company and the Company will utilize its best efforts to obtain the election
of such person who shall be entitled to receive the same compensation, expense
reimbursements and other benefits set forth above.
The Company agrees to indemnify and hold the Underwriters and such
Advisor or Director harmless against any and all claims, actions, damages, costs
and expenses, and judgments arising solely out of the attendance and
participation of your designee at any such meeting described herein. In the
event the Company maintains a liability insurance policy affording coverage for
the acts of its of officers and directors, it agrees, if possible, to include
the Representative's designee as an insured under such policy.
(v) Upon the Closing Date, the Company shall have entered into an
agreement with the Representative in form reasonably satisfactory to the
Representative (the "Consulting Agreement"), pursuant to which the
Representative will be retained as a management and financial consultant and
will be paid a fee equal to 2% of the net proceeds derived by the Company from
the sale of the Securities in the Offering, including the net proceeds derived
by the Company from the sale of Securities pursuant to the Underwriters' Option
referred to in Section 5 herein, all of which shall be paid upon the Closing
Date and Option Closing Date, as the case may be.
(w) The Company's Common Stock and Warrants shall be listed on the
Nasdaq SmallCap Market ("Nasdaq") not later than the Effective Date. Prior to
the Effective Date, the Company will make all filings required, including
registration under the Exchange Act, to obtain the listing of the Common Stock
and Warrants on Nasdaq, and will effect and use its best efforts to maintain
such
17
18
listing (unless the Company is acquired) for at least five years from the date
of this Agreement.
(x) The Company will apply for listing in Standard and Poors
Corporation Reports or Moodys OTC Guide and shall use its best efforts to have
the Company included in such publications for at least five years from the
Closing Date.
(y) For a period of twenty-four (24) months from the Closing Date,
no officer, director or holder of any securities of the Company (other than
shares that are currently publicly traded, in the case of stockholders who are
not officers, directors or 5% or greater stockholders) prior to the Offering
will, directly or indirectly, offer, sell (including any short sale), grant any
option for the sale of, acquire any option to dispose of, or otherwise dispose
of any shares of Common Stock, including shares of Common Stock issuable upon
exercise of options, warrants or any convertible securities of the Company,
without the prior written consent of the Representative, other than as set forth
in the Registration Statement. In order to enforce this covenant, the Company
shall impose stop-transfer instructions with respect to the securities owned by
every stockholder prior to the Offering until the end of such period (subject to
any exceptions to such limitation on transferability set forth in the
Registration Statement). If necessary to comply with any applicable Blue-sky
Law, the shares held by such stockholders will be escrowed with counsel for the
Company or otherwise as required.
(z) Except for the issuance of shares of capital stock by the
Company in connection with a dividend, recapitalization, reorganization or
similar transactions or as result of the exercise of warrants or options
disclosed in or issued or granted pursuant to plans disclosed in the
Registration Statement, the Company shall not, for a period of twenty-four (24)
months following the Closing Date, directly or indirectly, offer, sell, issue or
transfer any shares of its capital stock, or any security exchangeable or
exercisable for, or convertible into, shares of the capital stock or register
any of its capital stock (under any form of registration statement, including
Form S-8), without the prior written consent of the Representative. Options
granted pursuant to plans must be exercisable at the fair market value on the
date of grant.
(aa) During the three-year period from the Effective Date, X.X.
Xxxxxxx & Co., Inc., individually, and not as Representative of the
Underwriters, shall have a right of first refusal to act as underwriter or agent
of any and all public or private offerings of the securities of the Company, or
any successor to or subsidiary of the Company or any other entity in which the
Company has an equity interest (collectively referred to
18
19
herein as the "Company"), by the Company or any secondary offering of the
Company's securities by any of its officers, directors and 5% or greater
stockholders ("Principal Stockholders"). The Company has caused such Principal
Stockholders to deliver to the Representative on or before the date of this
Agreement, an agreement to this effect, as it relates to any proposed secondary
offering by such Principal Stockholders, in form and substance satisfactory to
the Representative and to counsel for the Representative.
(bb) For so long as any of the Warrants remain outstanding, the
Company shall maintain key person life insurance payable to the Company on each
of the lives of Xxxxxx X. Xxxxxx, its Chief Executive, and Xxxxxxx Xxxxxx, the
Chief Executive of Corbina Telecommunications and Comptel Ltd., the Company's
subsidiaries, each in the amount of $1,000,000, unless his employment with the
Company is earlier terminated. In such event, the Company will obtain a
comparable policy on the life of his successor for the balance of such period.
(cc) The Company will use its best efforts to obtain, as soon after
the Closing Date as is reasonably possible, liability insurance covering its
officers and directors.
(dd) The Company agrees that any conflict of interest arising
between a member of the Company's Board of Directors and the Company in
connection with such Director's dealing with, or obligations to, the Company,
shall be resolved by a vote of the majority of the independent members of the
Board of Directors.
(ee) The Company agrees that it will employ the services of a
financial public relations firm acceptable to the Representative for a period of
at least twelve months following the Effective Date.
4. Sale, Purchase and Delivery of Securities: Closing Date.
(a) The Company and the Selling Stockholder agree to sell to the
Underwriters, and the Underwriters, on the basis of the warranties,
representations and agreements of the Company and the Selling Stockholder
herein, and subject to the terms and conditions herein, agree to purchase the
Securities from the Company and the Selling Stockholder, as the case may be, at
a price of $7.00 per share of Common Stock and $.50 per Warrant, less an
underwriting discount of ten percent (10%) of the offering price for each
security. The Underwriters may allow a concession not exceeding $ per share of
Common Stock and $ per Warrant to Selected Dealers who are members of the
National Association of Securities Dealers, Inc ("NASD"), and to certain foreign
dealers, and such dealers may
19
20
reallow to NASD members and to certain foreign dealers a concession not
exceeding $ per share of Common Stock and $ per Warrant.
(b) Delivery of the Securities and payment therefor shall be made at
10:00 A.M., New York time on the Closing Date, as hereinafter defined, at the
offices of the Representative or such other location as may be agreed upon by
you and the Company. Delivery of certificates for the Common Stock and Warrants
(in definitive form and registered in such names and in such denominations as
you shall request by written notice to the Company delivered at least two
business days prior to the Closing Date), shall be made to you for the account
of the Underwriters against payment of the purchase price therefor by certified
or bank check or wire transfer payable in New York Clearing House funds to the
order of the Company. The Company will make such certificates available for
inspection at least two business days prior to the Closing Date at such place as
you shall designate.
(c) The "Closing Date" shall be , 1997, or such other date not later
than the fourth business day following the effective date of the Registration
Statement as you shall determine and advise the Company by at least three full
business days' notice, confirmed in writing.
(d) The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Securities by the Company to the
Underwriters shall be borne by the Company. The Company will pay and hold the
Underwriters, and any subsequent holder of the Securities, harmless from any and
all liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp taxes, if any, which may be payable or determined to be
payable in connection with the original issuance or sale to the Underwriters of
the Securities or any portions thereof.
5. Sale Purchase and Delivery of Additional Securities: Option Closing
Date.
(a) The Company agrees to sell to the Underwriters, and upon the
basis of the representations, warranties and agreements of the Company herein
contained, subject to the satisfaction of all the terms and conditions of this
Agreement, the Underwriters shall have the option (the "Option") to purchase the
Additional Securities from the Company, at the same price per Security as set
forth in Paragraph 4(a) above. Additional Securities may be purchased solely for
the purpose of covering over-allotments made in connection with the distribution
and sale of the Securities.
(b) The Option to purchase all or part of the Additional Securities
covered thereby is exercisable by you at any time and
20
21
from time to time before the expiration of a period of 45 calendar days from the
Effective Date of the Registration Statement (the "Option Period") by written
notice to the Company setting forth the number of Additional Securities for
which the Option is being exercised, the name or names in which the certificates
for such Additional Securities are to be registered and the denominations of
such certificates. Upon each exercise of the Option, the Company shall sell to
the Underwriters the aggregate number of Additional Securities specified in the
notice exercising such Option.
(c) Delivery of the Additional Securities with respect to which
Options shall have been exercised and payment therefor shall be made at 10:00
A.M., New York time on the Option Closing Date, as hereinafter defined, at the
offices of the Representative or at such other locations as may be agreed upon
by you and the Company. Delivery of certificates for Additional Securities shall
be made to you for the account of the Underwriters against payment of the
purchase price therefor by certified or bank check or wire transfer in New York
Clearing House Funds to the order of the Company. The Company will make
certificates for Additional Securities to be purchased at the Option Closing
Date available for inspection at least two business days prior to such Option
Closing Date at such place as you shall designate.
(d) The "Option Closing Date" shall be the date not later than five
business days after the end of the Option Period as you shall determine and
advise the Company by at least three full business days' notice, unless some
other time is agreed upon between you and the Company.
(e) The obligations of the Underwriters to purchase and pay for
Additional Securities at such Option Closing Date shall be subject to compliance
as of such date with all the conditions specified in Paragraph 2 herein and the
delivery to you of opinions, certificates and letters, each dated such Option
Closing Date, substantially similar in scope to those specified in Paragraph 9
herein.
(f) The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Additional Securities by the Company to
the Underwriters shall be borne by the Company. The Company will pay and hold
the Underwriters, and any subsequent holder of Additional Securities, harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying federal and state stamp taxes, if any, which may be payable or
determined to be payable in connection with the original issuance or sale to the
Underwriters of the Additional Securities or any portion thereof.
21
22
6. Warrant Solicitation Fee.
The Company agrees to pay X.X. Xxxxxxx & Co., Inc. ("Xxxxxxx"), in its
individual capacity and not as representative of the underwriters, a fee of five
percent (5%) of the aggregate exercise price of the Warrants if: (i) the market
price of the Common Stock is greater than the exercise price of the Warrants on
the date of exercise; (ii) the exercise of the Warrants are solicited by a
member of the NASD and the customer states in writing that the transaction was
solicited and designates in writing the broker-dealer to receive compensation
for the exercise; (iii) the Warrants are not held in a discretionary account;
(iv) the disclosure of compensation arrangements was made both at the time of
the Offering and at the time of the exercise of the Warrant; and (v) the
solicitation of the Warrant is not in violation of Regulation M promulgated
under the Exchange Act. The Company agrees not to solicit the exercise of any
Warrants other than through Xxxxxxx and will not authorize any other dealer to
engage in such solicitation without the prior written consent of the
Representative which will not be unreasonably withheld. The Warrant solicitation
fee will not be paid in a non-solicited transaction. No Warrant solicitation by
Xxxxxxx will occur prior to one year from the Effective Date.
7. Representations and Warranties of the Underwriters.
The Underwriters represent and warrant to the Company that:
(a) The Underwriters are each members in good standing of the
National Association of Securities Dealers, Inc., and have complied with all
NASD requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Underwriters' knowledge, there are no claims for services
in the nature of a finder's origination fee with respect to the sale of the
Securities hereunder to which the Company is, or may become, obligated to pay.
8. Payment of Expenses.
(a) The Company will pay and bear all costs, fees, taxes and
expenses incident to and in connection with: (i) the issuance, offer, sale and
delivery of the Securities, including all expenses and fees incident to the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement (including all exhibits
thereto), each Preliminary Prospectus, the Prospectus, and amendments and
post-effective amendments thereof and supplements thereto, and this Agreement
and related documents, Preliminary and Final Blue Sky Memoranda, including the
cost of preparing and copying all copies
22
23
thereof in quantities deemed necessary by the Underwriters; (ii) the costs of
preparing and printing all "Tombstone" and other appropriate advertisements;
(iii) the printing, engraving, issuance and delivery of the Common Stock,
Warrants, Warrant Shares, Additional Securities, Underwriters' Warrants and the
securities underlying the Underwriters' Warrant, including any transfer or other
taxes payable thereon in connection with the original issuance thereof; (iv) the
qualification of the Common Stock and Warrants under the state or foreign
securities or "Blue Sky" laws selected by the Underwriters and the Company, and
disbursements and reasonable fees of counsel for the Underwriters in connection
therewith (not to exceed $50,000) plus the filing fees for such states; (v) fees
and disbursements of counsel and accountants for the Company; (vi) other
expenses and disbursements incurred on behalf of the Company (vii) the filing
fees payable to the Commission and the National Association of Securities
Dealers, Inc. ("NASD"); (viii) any listing of the Common Stock and Warrants on a
securities exchange or on NASDAQ.
(b) In addition to the expenses to be paid and borne by the Company
referred to in Paragraph 8(a) above, the Company shall reimburse you at closing
for expenses incurred by you in connection with the Offering (for which you need
not make any accounting), in the amount of 3% of the price to the public of the
Securities and Additional Securities sold in the Offering. This 3%
non-accountable expense allowance shall cover the fees of your legal counsel,
but shall not include any expenses for which the Company is responsible under
Paragraph 8(a) above, including the reasonable fees and disbursements of your
legal counsel with respect to Blue Sky matters. As of the date hereof, $25,000
has been advanced by the Company to the Underwriters with respect to such
non-accountable expense allowance.
(c) In the event that the Company does not or cannot, for any reason
whatsoever other than a default by the Underwriters, expeditiously proceed with
the Offering, or if any of the Company's representations, warranties or
covenants contained in this Agreement are not materially correct or cannot be
complied with by the Company, or business prospects or obligations of the
Company are adversely affected and the Company does not commence or continue
with the Offering at any time or terminates the proposed transaction prior to
the Closing Date, the Company shall reimburse the Underwriters on an accountable
basis for all out-of-pocket expenses actually incurred in connection with the
Underwriting, this Agreement and all of the transactions hereby contemplated,
including, without limitation, your legal fees and expenses, up to an aggregate
total of $100,000 less such sums which have already been paid.
23
24
9. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its officers and directors made pursuant to the provisions hereof,
and to the performance by the Company of its covenants and agreements hereunder
and under each certificate, opinion and document contemplated hereunder and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., New York time, on the date following the date of this Agreement,
or such later date and time as shall be consented to in writing by you and, on
or prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Securities
under the securities laws of any jurisdiction shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
to your knowledge or the knowledge of the Company, shall be contemplated by the
Commission or any such authorities of any jurisdiction and any request on the
part of the Commission or any such authorities for additional information shall
have been complied with to the reasonable satisfaction of the Commission or such
authorities and counsel to the Underwriters and after the date hereof no
amendment or supplement shall have been filed to the Registration Statement or
Prospectus without your prior consent.
(b) The Registration Statement or the Prospectus or any amendment
thereof or supplement thereto shall not contain an untrue statement of a fact
which is material, or omit to state a fact which is material and is required to
be stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Between the time of the execution and delivery of this Agreement
and the Closing Date, there shall be no litigation instituted against the
Company or any of its officers or directors and between such dates there shall
be no proceeding instituted or, to the Company's knowledge, threatened against
the Company or any of its officers or directors before or by any federal, state
or county commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, in which litigation or proceeding an
unfavorable ruling, decision or finding would have a material adverse effect on
the Company or its business, business prospects or properties, or have a
material adverse effect on the financial condition or results of operation of
the Company.
24
25
(d) Each of the representations and warranties of the Company
contained herein and each certificate and document contemplated under this
Agreement to be delivered to you shall be true and correct at the Closing Date
as if made at the Closing Date, and all covenants and agreements contained
herein and in each such certificate and document to be performed on the part of
the Company, and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company at or prior to the
Closing Date shall be fulfilled or complied with.
(e) At the Closing Date, you shall have received the opinion of Hall
Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP, counsel to the Company, dated as of such
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Company and each of its Subsidiaries are corporations
duly organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation with full corporate power and authority, and
all licenses, permits, certifications, registrations, approvals, consents and
franchises to own or lease and operate their properties and to conduct their
businesses as described in the Registration Statement. The Company and each of
its Subsidiaries are duly qualified to do business as foreign corporations and
are in good standing in all jurisdictions wherein such qualification is
necessary and failure so to qualify could have a material adverse effect on the
financial condition, results of operations, business or properties of the
Company and each of its Subsidiaries;
(ii) The Company has full corporate power and authority to
execute, deliver and perform the Underwriting Agreement, the Consulting
Agreement, the Warrant Agreement and the Representative's Warrants and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Representative's Warrants by the Company, the consummation by
the Company of the transactions therein contemplated and the compliance by the
Company with the terms of the Underwriting Agreement, the Consulting Agreement,
the Warrant Agreement and the Representative's Warrants have been duly
authorized by all necessary corporate action, and each of the Underwriting
Agreement, the Consulting Agreement, the Warrant Agreement and the
Representative's Warrants have been duly executed and delivered by the Company.
Each of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Representative's Warrants is a valid and binding obligation of
the Company, enforceable in accordance with their respective terms, subject, as
to enforcement of remedies, to applicable bankruptcy,
25
26
insolvency, reorganization, moratorium and other laws affecting the rights of
creditors generally and the discretion of courts in granting equitable remedies
and except that enforceability of the indemnification provisions and the
contribution provisions set forth in the Underwriting Agreement may be limited
by the federal securities laws or public policy underlying such laws;
(iii) The execution, delivery and performance of the
Underwriting Agreement, the Consulting Agreement, the Warrant Agreement and the
Representative's Warrants by the Company, the consummation by the Company of the
transactions therein contemplated and the compliance by the Company with the
terms of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Representative's Warrants do not, and will not, with or
without the giving of notice or the lapse of time, or both, (A) result in a
violation of the Certificate of Incorporation, as the same may be amended, or
Bylaws of the Company or any of its Subsidiaries, (B) to the best of our
knowledge, result in a breach of, or conflict with, any terms or provisions of
or constitute a default under, or result in the modification or termination of,
or result in the creation or imposition of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, note, contract, commitment or
other material agreement or instrument to which the Company or any of its
Subsidiaries are a party or by which the Company or any of its Subsidiaries or
any of their properties or assets are or may be bound or affected, except where
any of the foregoing would not result in a material adverse effect upon the
Company's or any Subsidiaries business or operations; (C) to the best of our
knowledge, violate any existing applicable law, rule or regulation or judgment,
order or decree known to us of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their properties or businesses; or (D) to the best of our knowledge, have any
effect on any permit, certification, registration, approval, consent, license or
franchise necessary for the Company or any of its Subsidiaries to own or lease
and operate their properties and to conduct their business or the ability of the
Company or any of its Subsidiaries to make use thereof;
(iv) To the best of our knowledge, no authorization, approval,
consent, order, registration, license or permit of any court or governmental
agency or body (other than under the Act, the Regulations and applicable state
securities or Blue Sky laws) is required for the valid authorization, issuance,
sale and delivery of the Securities, the Additional Securities, the Common
Stock, the Warrants, the Warrant Shares, or the Representative's Warrants, and
the consummation by the Company of
26
27
the transactions contemplated by the Underwriting Agreement, the Consulting
Agreement, the Warrant Agreement or the Representative's Warrants;
(v) The Registration Statement was declared effective under
the Act on , 1997; to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending, threatened or contemplated
under the Act or applicable state securities laws;
(vi) The Registration Statement and the Prospectus, as of the
Effective Date (except for the financial statements and other financial data
included therein or omitted therefrom, as to which we express no opinion),
comply as to form in all material respects with the requirements of the Act and
Regulations and the conditions for use of a registration statement on Form SB-2
have been satisfied by the Company;
(vii) The description in the Registration Statement and the
Prospectus of statutes, regulations, contracts and other documents have been
reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to the
best of our knowledge, there are no material statutes or regulations, or, to the
best of our knowledge, material contracts or documents, of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement, which are not so described or filed
as required.
To the best of our knowledge, none of the material provisions
of the contracts or instruments described above violates any existing applicable
law, rule or regulation or judgment, order or decree known to us of any United
States governmental agency or court having jurisdiction over the Company or any
of its assets or businesses;
(viii) The outstanding Common Stock and Warrants have been
duly authorized and validly issued. The outstanding Common stock is fully paid
and nonassessable. To the best of our knowledge, none of the outstanding Common
Stock has been issued in violation of the preemptive rights of any stockholder
of the Company. None of the holders of the outstanding Common Stock is subject
to personal liability solely by reason of being such a holder. The authorized
Common Stock conforms to the description thereof contained in the Registration
Statement and Prospectus. To the best of our knowledge, except as set forth in
the Prospectus, no holders of any of the Company's securities has any rights,
"demand," "piggyback" or otherwise, to have such securities registered under the
Act;
27
28
(ix) The issuance and sale of the Securities, the Additional
Securities, the Common Stock, the Warrants, the Warrant Shares and the
Representative's Warrants have been duly authorized and when issued will be
validly issued, fully paid and nonassessable, and the holders thereof will not
be subject to personal liability solely by reason of being such holders. Neither
the Securities, the Additional Securities, nor the Common Stock are subject to
preemptive rights of any stockholder of the Company. The certificates
representing the Securities are in proper legal form;
(x) The issuance and sale of the Warrant Shares and the
Representative's Warrants have been duly authorized and, when paid for, issued
and delivered pursuant to the terms of the Warrant Agreement or the
Representative's Warrants, as the case may be, the Warrants, the Warrant Shares
and the Representative's Warrants will constitute the valid and binding
obligations of the Company, enforceable in accordance with their terms, to issue
and sell the Warrants, the Warrant Shares and/or Representative's Warrants. All
corporate action required to be taken for the authorization, issuance and sale
of the securities has been duly, validly and sufficiently taken. The Common
Stock and the Warrants have been duly authorized by the Company to be offered in
the form of the Securities. The Warrants, the Warrant Shares and the
Representative's Warrants conform to the descriptions thereof contained in the
Registration Statement and Prospectus;
(xi) The Underwriters have acquired good title to the
Securities, free and clear of all liens, encumbrances, equities, security
interests and claims, provided that the Underwriters are bona fide purchasers as
defined in Section 8-302 of the Uniform Commercial Code;
(xii) Assuming that the Underwriters exercise the
over-allotment option to purchase the Additional Securities and make payments
therefor in accordance with the terms of the Underwriting Agreement, upon
delivery of the Additional Securities to the Underwriters thereunder, the
Underwriters will acquire good title to the Additional Securities, free and
clear of any liens, encumbrances, equities, security interests and claims,
provided that the Underwriters are bona fide purchasers as defined in
Section 8-302 of the Uniform Commercial Code;
(xiii) To the best of our knowledge, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries before
any governmental agency, court or tribunal, foreign or domestic, or before any
private arbitration tribunal, pending or threatened against the Company or any
of its Subsidiaries or involving their properties or businesses, other than as
described in the Prospectus, such description being accurate, and other than
litigation incident to the kind of
28
29
business conducted by the Company or any of its Subsidiaries which, individually
and in the aggregate, is not material, and, except as otherwise disclosed in the
Prospectus and the Registration Statement, the Company and its Subsidiaries have
complied with all federal and state laws, statutes and regulations concerning
its business;
(xiv) All sales of the Company's securities have been made in
compliance with or under an exemption from the registration requirements of the
Act, and no purchaser of such securities in any such sale has a right of action
against the Company for failure to comply with the registration or filing
requirements of any state; and
(xv) We have participated in reviews and discussions in
connection with the preparation of the Registration Statement and the
Prospectus. Although we are not passing upon and do not assume responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, no facts came to our attention which lead us to believe
that (A) the Registration Statement (except as to the financial statements and
other financial data contained therein, as to which we express no opinion), on
the Effective Date, contained any untrue statement of a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or that (B) the
Prospectus (except as to the financial statements and other financial data
contained therein, as to which we express no opinion) contains any untrue
statement or a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(f) At the Closing Date, you shall have received the opinion of
Irina Igitova, Esq., special counsel to the Company with respect to the laws of
the Russian Federation, dated as of such Closing Date, addressed to the
Underwriters and in form and substance satisfactory to counsel to the
Underwriters, to the effect that:
(i) Corbina Telecommunications ("Corbina"), CompTel Ltd.
("CompTel") and Investelektrosvyaz ("Investelectro") (the "Russian
Subsidiaries") have been duly organized and are validly existing as closed joint
stock companies in good standing under the laws of the Russian Federation, and
have full corporate power and authority to own their properties and conduct
their businesses as described in the Registration Statement and Prospectus;
29
30
(ii) The Russian Subsidiaries have obtained, or are in the
process of obtaining, all licenses, permits and other governmental
authorizations necessary to conduct their businesses as described in the
Prospectus, and such licenses, permits and other governmental authorizations
obtained are in full force and effect, and the Russian Subsidiaries are in all
material respects complying therewith;
(iii) The Company owns 75% of the issued and outstanding
capital stock of each of Corbina and CompTel, and CompTel owns 51% of
Investelectro; all of the Russian Subsidiaries' outstanding securities have been
duly authorized, are validly issued, fully paid and non-assessable and have not
been issued in violation of the preemptive rights of any security holder;
(iv) Such counsel knows of no pending or threatened legal or
governmental proceedings to which either or the Russian Subsidiaries are a party
which could materially adversely affect the business, property, financial
conduct or operations of either of the Russian Subsidiaries;
(v) Such counsel is familiar with all contracts or other
agreements entered into by the Russian Subsidiaries with other Russian
companies, entities, banking institutions or individuals referred to in the
Registration Statement and Prospectus (collectively, the "Russian Agreements"),
and all such Russian Agreements are valid, binding and enforceable under Russian
law, and to the knowledge of such counsel, neither of the Russian Subsidiaries
is in default under any of the Russian Agreements;
(vi) Neither of the Russian Subsidiaries is in violation of or
in default under its Charter Documents or Bylaws, or to the knowledge of such
counsel, in the performance or observance of any material obligation, agreement,
covenant or condition contained in any bond, debenture, note or other evidence
of indebtedness or in any contract, indenture, mortgage, loan agreement or
instrument to which either Russian Subsidiary is are a party or by which it or
any of its properties may be bound, or in violation of any material order, rule,
regulation, writ, injunction or decree of any government or governmental
instrumentality or court; and
(vii) Pursuant to the laws of the Russian Federation, the
minority stockholders of Corbina, CompTel and Investelectro will not be able to
prevent the Company from carrying out the businesses of such Russian
Subsidiaries or the Company, such as consummating material transactions or
declaring dividends in cash or stock.
30
31
(g) On or prior to the Closing Date, counsel for the Underwriters
shall have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review the matters
referred to in subparagraphs (e) and (f) of this Paragraph 9, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(h) Prior to the Closing Date:
(i) There shall have been no material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus;
(ii) There shall have been no transaction, outside the
ordinary course of business, entered into by the Company from the latest date as
of which the financial condition of the Company is set forth in the Registration
Statement and Prospectus which is material to the Company, which is either (x)
required to be disclosed in the Prospectus or Registration Statement and is not
so disclosed, or (y) likely to have material adverse effect on the Company's
business or financial condition;
(iii) The Company shall not be in default under any material
provision of any instrument relating to any outstanding indebtedness, except as
described in the Prospectus;
(iv) No material amount of the assets of the Company shall
have been pledged, mortgaged or otherwise encumbered, except as set forth in the
Registration Statement and Prospectus;
(v) No action, suit or proceeding, at law or in equity, shall
have been pending or to its knowledge threatened against the Company or
affecting any of its properties or businesses before or by any court or federal
or state commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding would materially and adversely affect the business,
operations, prospects or financial condition or income of the Company, taken as
a whole, except as set forth in the Registration Statement and Prospectus; and
(vi) No stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or, to the Company's knowledge,
threatened by the Commission.
(vii) Each of the representations and warranties of the
Company contained in this Agreement and in each certificate and document
contemplated under this Agreement to be delivered to you
31
32
was, when originally made and is at the time such certificate is dated, true and
correct.
(i) Concurrently with the execution and delivery of this Agreement
and at the Closing Date, you shall have received a certificate of the Company
signed by the Chief Executive Officer of the Company and the principal financial
officer of the Company, dated as of the Closing Date, to the effect that the
conditions set forth in subparagraph (h) above have been satisfied and that, as
of the Closing Date, the representations and warranties of the Company set forth
in Paragraph 2 herein and the statements in the Registration Statement and
Prospectus were and are true and correct. Any certificate signed by any of
officer of the Company and delivered to you or for counsel for the Underwriters
shall be deemed a representation and warranty by the Company to the Underwriters
as to the statements made therein.
(j) All proceedings taken in connection with the authorization,
issuance or sale of the Common Stock, Warrants, Warrant Shares, Additional
Securities, the Representative's Warrants and the Representative's Warrant
Shares as herein contemplated shall be satisfactory in form and substance to you
and to counsel to the Underwriters, and the Underwriters shall have received
from such counsel an opinion, dated as the Closing Date with respect to such of
these proceedings as you may reasonably require.
(k) The Company shall have furnished to you such certificates,
additional to those specifically mentioned herein, as you may have reasonably
requested in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement or the Prospectus, as to
the accuracy, at the Closing Date, of the representations and warranties of the
Company herein and in each certificate and document contemplated under this
Agreement to be delivered to you, as to the performance by the Company of its
obligations hereunder and under each such certificate and document or as to the
fulfillment of the conditions concurrent and precedent to your obligations
hereunder.
(l) The obligation of the Underwriters to purchase Additional
Securities hereunder is subject to the accuracy of the representations and
warranties of the Company contained herein on and as of the Option Closing Date
and to the satisfaction on and as of the Option Closing Date of the conditions
set forth herein.
(m) On the Closing Date there shall have been duly tendered to you
for your account the appropriate number of shares of Common Stock and Warrants
constituting the Securities.
32
33
10. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters and each person, if any, who
controls the Underwriters ("controlling person") within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages, actions and expenses or liability, joint
or several, whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), joint or
several, to which it or such controlling persons may become subject under the
Act, the Exchange Act or under any other statute or at common law or otherwise
or under the laws of foreign countries, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any Preliminary Prospectus or the Prospectus (as from
time to time amended and supplemented); in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
the Warrant Shares of the Company issued or issuable upon exercise of the
Warrants, or Underwriters' Warrant Shares upon exercise of the Underwriters'
Warrants; or in any application or other document or written communication (in
this Paragraph 10 collectively called "application") executed by the Company or
based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock, Warrants, Warrant Shares,
Additional Securities, Underwriters' Warrants and Underwriters' Warrant Shares
(including the Shares issuable upon exercise of the Warrants underlying the
Underwriters' Warrants) under the securities laws thereof or filed with the
Commission or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon or in conformity with written information
furnished to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in
application, as the case may be. Notwithstanding the foregoing, the Company
shall have no liability under this Paragraph 10(a) if any such untrue statement
or omission made in a Preliminary Prospectus, is cured in the Prospectus and the
Underwriters failed to deliver to the person or persons alleging the liability
upon which indemnification is being sought, at or prior to the written
confirmation of such sale, a copy of the Prospectus. This indemnity will be in
addition to any liability which the Company may otherwise have.
33
34
(b) The Underwriters agree to indemnify and hold harmless the
Company and each of the officers and directors of the Company who have signed
the Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Paragraph 10(a), but only with respect to any untrue
statement or alleged untrue statement of any material fact contained in or any
omission or alleged omission to state a material fact required to be stated in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereof or necessary to make the statements therein not
misleading or in any application made solely in reliance upon, and in conformity
with, written information furnished to the Company by you specifically expressly
for use in the preparation of such Preliminary Prospectus, the Registration
Statement or Prospectus directly relating to the transactions effected by the
Underwriters in connection with this Offering. This indemnity agreement will be
in addition to any liability which the Underwriters may otherwise have.
Notwithstanding the foregoing, the Underwriters shall have no liability under
this Paragraph 10(b) if any such untrue statement or omission made in a
Preliminary Prospectus is cured in the Prospectus, and the Prospectus is
delivered to the person or persons alleging the liability upon which
indemnification is being sought.
(c) If any action is brought against any indemnified party (the
"Indemnitee") in respect of which indemnity may be sought against another party
pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume the
defense of the action, including the employment and fees of counsel (reasonably
satisfactory to the Indemnitee) and payment of expenses. Any Indemnitee shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such Indemnitee unless
the employment of such counsel shall have been authorized in writing by the
Indemnitor in connection with the defense of such action. If the Indemnitor
shall have employed counsel to have charge of the defense or shall previously
have assumed the defense of any such action or claim, the Indemnitor shall not
thereafter be liable to any Indemnitee in investigating, preparing or defending
any such action or claim. Each Indemnitee shall promptly notify the Indemnitor
of the commencement of any litigation or proceedings against the Indemnitee in
connection with the issue and sale of the Common Stock, Warrants, Warrants
Shares, Additional Securities, Underwriters' Securities or in connection with
the Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution under
the Act in any case in which: (i) the
34
35
Underwriters make a claim for indemnification pursuant to Paragraph 10 hereof,
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the time to appeal has expired or the last
right of appeal has been denied) that such indemnification may not be enforced
in such case notwithstanding the fact that this Paragraph 10 provides for
indemnification of such case; or (ii) contribution under the Act may be required
on the part of the Underwriters in circumstances for which indemnification is
provided under this Paragraph 10, then, and in each such case, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after any contribution from others) in
such proportion so that the Underwriters are responsible for the portion
represented by dividing the total compensation received by the Underwriters
herein by the total purchase price of all Securities sold in the public offering
and the Company is responsible for the remaining portion; provided, that in any
such case, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
The foregoing contribution agreement shall in no way affect the
contribution liabilities of any persons having liability under Section 11 of the
Act other than the Company and the Underwriters. As used in this Paragraph 10,
the term "Underwriters" includes any officer, director, or other person who
controls the Underwriters within the meaning of Section 15 of the Act, and the
word "Company" includes any of officer, director or person who controls the
Company within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
Underwriters and each person who controls the Underwriters shall be entitled to
contribution from the Company to the full extent permitted by law. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit or proceeding, such party will, if a claim for contribution in respect
thereof is made against another party (the "contributing party"), notify the
contributing party of the commencement thereof, but the omission so to notify
the contributing party will not relieve it from any liability it may have to any
other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought against any
party, and such party notifies a contributing party or his or its representative
of the commencement thereof within the aforesaid fifteen (15) days, the
contributing party will be
35
36
entitled to participate therein with the notifying party and any other
contributing party similarly notified. Any such contributing party shall not be
liable to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The indemnification provisions
contained in this Paragraph 10 are in addition to any other rights or remedies
which either party hereto may have with respect to the other or hereunder.
11. Representations Warranties Agreements to Survive Delivery.
The respective indemnity and contribution agreements by the Underwriters
and the Company contained in Paragraph 10 hereof, and the covenants,
representations and warranties of the Company and the Underwriters set forth in
this Agreement, shall remain operative and in full force and effect regardless
of (i) any investigation made by the Underwriters or on its behalf or by or on
behalf of any person who controls the Underwriters, or by the Company or any
controlling person of the Company or any director or any of officer of the
Company, (ii) acceptance of any of the Securities and payment therefor, or (iii)
any termination of this Agreement, and shall survive the delivery of the
Securities and any successor of the Underwriters or the Company, or of any
person who controls you or the Company or any other indemnified party, as the
case may be, shall be entitled to the benefit of such respective indemnity and
contribution agreements. The respective indemnity and contribution agreements by
the Underwriters and the Company contained in this Paragraph 11 shall be in
addition to any liability which the Underwriters and the Company may otherwise
have.
12. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 10:00 A.M., New York
time, on the first full business day following the day on which you and the
Company receive notification that the Registration Statement became effective.
(b) This Agreement may be terminated by the Representative by
notifying the Company at any time on or before the Closing Date, if any domestic
or international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, securities markets; or
if trading on the New York Stock Exchange, the American Stock Exchange, or in
the over-the-counter market shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD
or NASDAQ or by
36
37
order of the Commission or any other governmental authority having jurisdiction;
or if a moratorium in foreign exchange trading by major international banks or
persons has been declared; or if the Company shall have sustained a loss
material or substantial to the Company taken as a whole by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in your
opinion, make it inadvisable to proceed with the delivery of the Securities; or
if there shall have been a material adverse change in the conditions of the
securities market in general, as in your reasonable judgment would make it
inadvisable to proceed with the offering, sale and delivery of the Securities;
or if there shall have been a material adverse change in the financial or
securities markets, particularly in the over-the-counter market, in the United
States having occurred since the date of this Agreement.
(c) If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Paragraph 12, the Company
shall be notified promptly by you by telephone or facsimile, confirmed by
letter.
(d) If this Agreement shall not become effective by reason of an
election of the Representative pursuant to this Paragraph 12 or if this
Agreement shall not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any undertaking, or to satisfy
any condition of this Agreement by it to be performed or satisfied, the sole
liability of the Company to the Underwriters, in addition to the obligations
assumed by the Company pursuant to Paragraph 8 herein, will be to reimburse the
Underwriters for the following: (i) Blue Sky counsel fees and expenses to the
extent set forth in Paragraph 8(a)(iv); (ii) Blue Sky filing fees; and (iii)
such reasonable out-of-pocket expenses of the Underwriters (including the fees
and disbursements of their counsel), to the extent set forth in Paragraph 8(c),
in connection with this Agreement and the proposed offering of the Securities,
but in no event to exceed the sum of $100,000 less such amounts already paid.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and whether or not
this Agreement is otherwise carried out, the provisions of Paragraphs 8 and 10
hereof shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
13. Notices.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered or telegraphed and
37
38
confirmed to the Representative at X.X. Xxxxxxx & Co., Inc., Xxx Xxxxxxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxx Xxxxxxxxxxx, with a copy thereof
to Xxxxxxxx X. Xxxxxxx, III, Esq., Gusrae Xxxxxx & Bruno, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, and, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed to the Company at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxx, President, with a copy thereof to Hall
Xxxxxxx Xxxx Xxxxxxxx & Xxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxx, Esq.
14. Parties.
This Agreement shall inure solely to the benefit of and shall be binding
upon, the Underwriters, the Company and the controlling persons, directors and
officers referred to in Paragraph 10 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
15. Construction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York and shall supersede any
agreement or understanding, oral or in writing, express or implied, between the
Company and you relating to the sale of any of the Securities.
16. Jurisdiction and Venue.
The Company agrees that the courts of the State of New York shall have
jurisdiction over any litigation arising from this Agreement, and venue shall be
proper in the Southern District of New York.
17. Counterparts.
This agreement may be executed in counterparts.
38
39
If the foregoing correctly sets forth the understanding between you, the
Selling Stockholders and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
RUSSIAN WIRELESS TELEPHONE COMPANY, INC.
By:______________________________________
Xxxxxx X. Xxxxxx, President
The Selling Stockholder:
THE CAM XXXXXX FOUNDATION
By:______________________________________
Accepted as of the date first
above written:
X.X. XXXXXXX & CO., INC.
By:_____________________________________
39
40
SCHEDULE A
Stock to be Sold By the Selling Stockholder
Name Number of Shares
---- ----------------
The Cam Xxxxxx Foundation 30,000
------
Total: 30,000
======
41
SCHEDULE B
Number of Shares Number of
of Common Stock Warrants to
to be Purchased to be Purchased
---------------- ---------------
Underwriter
-----------
X.X. Xxxxxxx & Co., Inc.
--------- ---------
Total: 1,530,000 2,200,000
========= =========
